Trinidad & Tobago Country Statistics

LOCATION

Located 11 km (7 miles) off the north-eastern coast of Venezuela and at the most southern tip of the Caribbean archipelago, the twin-island nation of Trinidad and Tobago is strategically positioned for trade with neighbouring islands as well as with North and South America.

TRINIDAD AND TOBAGO ECONOMY

Trinidad and Tobago is the largest economy in the Caribbean Community (Caricom) and is highly dependent on its petroleum sector, which has contributed approximately 36 percent of GDP over the last six years. In the early 1990s the petroleum sector evolved from being oil dominant to a natural gas dominant sector. Despite being one of the world’s largest exporters of ammonia and methanol, the energy sector is currently undergoing a transformation. The state-owned Petroleum Company of Trinidad and Tobago Ltd. (PETROTRIN) is set to cease its refining operations by the end of 2018 due to its low profitability. PETROTRIN will now focus on exploration and production. Since 2015, the energy sector has seen its fair share of problems, with weak global energy prices and declining oil and gas production. Crude oil production has been trending downwards, given the absence of significant new crude oil discoveries. Natural gas output declined because of disruptions related to upgrades and other maintenance work carried out by key upstream producers in recent years.

Between 2000 and 2007, the domestic economy experienced healthy expansion with real GDP growth averaging around 8 percent. Although Trinidad and Tobago weathered the 2008 financial crisis better than many other countries, economic growth has been patchy and the government has been running on fiscal deficits since then. In 2017, the economy suffered its second consecutive year of contraction (-1.9 percent), following a contraction of 6.5 percent in 2016. In addition to layoffs in the energy sector (mainly related to PETROTRIN’s restructure), there have also been job losses in the non-energy sector, primarily in distribution and construction. The decline in export earnings and the tight foreign exchange market have placed some pressure on the TT currency, which has depreciated slightly over the last two years. The TT$/US$ exchange rate averaged 6.6715 in 2016 but has since increased, averaging 6.7808 for the first 10 months of 2018. While the foreign reserves position has weakened, it is still considered to be in a healthy position at 8 months of import cover as at October, 2018.

The domestic economy rebounded slightly in 2018 as a result of favourable global energy prices as well as higher natural gas and petrochemical production. During the last five years, West Texas Intermediate (WTI) oil prices plummeted from an average of US$93.17 per barrel (p/b) in 2014 to US$50.79 p/b in 2017, but has since increased to US$70.75 p/b in October, 2018. While natural gas output has improved to average 3.7 billion cubic feet (bcf) in the first nine months of 2018, this is still below the 4.1 bcf recorded in 2014. Oil output continues to wane falling to approximately 66,000 barrels of oil per day (BOPD) in the first eight months of 2018 compared to 72,000 BOPD for the same period of 2017. Nonetheless, this could change in the long-term, if plans to significantly boost PETROTRIN’s exploration activity are successful.

In 2018, both Moody’s Investors Service and Standard and Poor’s maintained Trinidad and Tobago’s credit rating, though the latter had revised its outlook to negative. Standard and Poor’s rating agency has expressed concerns that the mild turnaround in the economy could be stifled by historical gas supply shortages, exchange rate pressure and restrictions in accessing foreign currency among other challenges. Trinidad and Tobago is still blacklisted as a ‘tax haven’ by the European Union (EU), but in spite of this, the country continues to boast a solid financial system. The authorities remain committed to becoming fully Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) compliant.

The nation also has a well-developed industrial sector and a number of experienced industrial services companies. The domestic manufacturing sector is also diverse, with businesses in areas such as food processing, pharmaceuticals, alcoholic beverages, cosmetics, steel, cement, glass and plastics. Tobago is mainly dependent on tourism as it has strong nature and eco-tourism appeal. Notwithstanding, the business sector is not without challenges. The nation is currently ranked 78th out of 140 countries in the World Economic Forum’s Global Competitiveness Report 2018 and over the last five years, poor work ethic, inefficient government bureaucracy, corruption and crime and theft have been the main problematic factors. In the World Bank’s Doing Business 2019 Report, Trinidad and Tobago is ranked 105th out of 190 countries in ease of doing business with weak scores in key areas such as enforcing contracts, paying taxes and registering property.

Government’s fiscal operations have improved over the last couple of years and the debt burden has been reduced from 62.1 percent of GDP in fiscal 2017 to 60.9 percent of GDP in fiscal 2018. The Heritage and Stabilization Fund (HSF), which acts as a buffer for the economy, has increased in value from US$5,762.5 million as at September, 2017 to US$5,979.4 by September, 2018. Over the next two years, the authorities are expected to remain committed to fiscal consolidation and driving structural reforms. Tourism, international financial services and maritime activities are just a few areas that seem to be on the agenda for the future. However, the energy sector will continue to be the mainstay for the economy over the next decade.